New York, NY - De Blasio Claims His Administration Unwittingly Signed Off On Shady Land Deal For Lower East Side Property

Published on: March 29th, 2016 at 06:00 PM

New York, NY - A 2015 land deal approved by the de Blasio administration for $16.15 million which lifted deed restrictions on the 150,000-square-foot property located at 45 Rivington Street on the Lower East Side is now being investigated by City Comptroller Scott Stringer and the Department of Investigation. The city made the deal with the Brooklyn-based Allure Group, a for-profit nursing home operator.

In a 2014 e-mail, Joel Landau, an Allure executive who signed the deed modification, wrote that 45 Rivingston Street would remain a nursing home, but would change its designation from nonprofit to for-profit. Landau claimed he needed the city’s assistance in making the change because the community board wanted to leave the facility as a nonprofit nursing home.

The Wall Street Journal reports (http://on.wsj.com/22LR5oI) that once the usage restrictions were lifted, the Allure Group flipped the property for $116 million to a group of developers who plan to build luxury condominiums on the site. But according to Department of Citywide Administrative Services’ (DCAS) records, the property was already in contract with the developers even before the deed restrictions were lifted.

The Mayor has said his administration was “too trusting” when it failed to obtain a written agreement with the Allure Group. De Blasio went so far as to say the Allure Group “lied” to city officials.

“I’m not happy about it, that it happened,” the mayor said at a press conference. “I’m not happy about the fact that I didn’t hear about it in advance before it became public, and we’re looking now to see what actions we can take to penalize this company. We should not be trusting in these situations. We need real guarantees that a company will not basically flip a property and use it for private gain when they’ve made a commitment to some public usage.”

Officials from the Allure Group declined to comment.

Local residents say they are concerned that the location will no longer offer health services. For years, the Rivington House served HIV/AIDS patients. Residents say they need more affordable housing and health-care providers, not luxury buildings.

Stringer’s office has since subpoenaed all documents related to the sale, including copies of the appraisals and all deed restriction correspondence. Thus far, the city has complied.

“The mayor is deeply concerned about the result of what was clearly a flawed process,” added First Deputy Mayor Anthony Shorris via a statement. “The city must always take every step it can to ensure complete transparency around development.”

As of March 1, all deed restriction removal applications have been placed on hold pending a review by DCAS. Going forward, all deed modification requests will also be sent to the respective borough president, City Council member, and community board for review.